Downstream Nickel Becomes Indonesia's Way Towards Green Industry Leap

JAKARTA - The Indonesian government continues to strengthen nickel downstream as the foundation for the development of the electric vehicle battery industry (EV) and strategic efforts towards a green economy. Since the nickel ore export ban policy was implemented in 2014, the export value of nickel processed products has jumped from around US$1 billion to more than US$33.64 billion in 2024.

This Downstream contributed to the growth of the manufacturing industry sector, creating thousands of jobs, and increasing the value of domestic added significantly.

Currently, Indonesia is starting to step into the next phase, building an integrated EV Battery industrial ecosystem, starting from the production of precursors to the assembly of battery cells and electric vehicles. Large projects such as the construction of battery factories in Karawang and Morowali show a strong commitment to creating competitive domestic supply chains in the global market.

If successfully accelerated, the development of this ecosystem is projected to produce much larger added value. As a comparison, China, which has built an EV supply chain since decades ago, in 2023 recorded the contribution of the EV and battery industry to more than 150 billion US dollars and made the country the world's main exporter of electric vehicles.

Deputy Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Downstreaming Committee, Djoko Widayatno, emphasized that nickel downstream has contributed greatly to national economic growth. However, he stressed the importance of pushing downstream to a further stage, namely the development of the electric vehicle battery ecosystem (EV), to create greater and more sustainable added value.

Djoko revealed that since the export ban on nickel ore was imposed in 2014 and strengthened in 2020, exports of processed nickel products have jumped sharply. In 2014, the export value of processed nickel was recorded at around Rp. 17 trillion, while in 2023 it reached Rp. 510 trillion. Indonesia is now the largest exporter of processed nickel in the world.

Indonesia has scored a strategic achievement in nickel downstreaming. However, so that this process is truly sustainable and inclusive, it needs to be strengthened by good governance and comprehensive industrial ecosystem development," Djoko told reporters, quoted on Friday, June 27.

According to him, the next step must be directed at the development of end products such as EV batteries and stainless steel, not just semi-finished products. He noted, the added value of battery-based products can reach hundreds of times compared to raw ore. For example, mixed hydroxide precipitate (MHP) is worth up to 120 times nickel ore, while EV cell batteries can reach 642 times.

Djoko continued, Indonesia must learn from China's success in developing the EV battery industry as evidence of the great economic potential of further downstreaming. Where, currently China controls around 60 percent of global EV production and 80 percent of the world battery market, as well as the largest center of technology and supply chain of electric vehicles globally.

"For this reason, we encourage the government to strengthen environmental governance, expand local human resource training, and encourage technology transfer so that the downstream nickel industry provides maximum benefits for Indonesia," he said.

Djoko emphasized the importance of directing high grade nickel for EV battery products, not just stainless steel in order to maximize nickel potential in the energy transition and support the Net Zero Emissions (NZE) 2060 target. In addition, he also encourages the use of clean technology such as High Pressure Acid Leach (HPAL) and the application of standard Environment, Social, and Governance (ESG) in all supply chains.

Future transportation must be supported by a sustainable industry. Our nickel must be the backbone of the green energy transition, not just short-term export commodities," he concluded.